One of the easiest ways to get money from a business environment into a personal environment is through employer pension contributions. This can be a great use of surplus business cash.

The big issue with this is that you technically don’t have access to these funds until you’re over 55 (rising to 57 in 2028).

Most business owners who are both making a profit and have surplus cash should be making lump sum and/or monthly pension contributions. But there are a few things to beware of:


  • The Lifetime Allowance (LTA), the maximum threshold for receiving tax relief
  • Tapered Annual Allowance, where your LTA is reduced if you have a particularly high income
  • Carry forward calculations, potentially allowing you to increase your Annual Allowance in a tax year.


These terms magnify how complex pensions are as they have continually been tinkered with over the years.

  • Good tax benefits, such as Corporation Tax relief
  • Control over your investment choices.
  • No access to the capital or income until age 55
  • Complicated tax rules.

Remember to keep the pension LTA in mind when making pension contributions.

You have a pension LTA of £1,073,100. After this threshold, you won’t receive tax relief on your contributions.

If you have a particularly high income, you may be subject to the Tapered Annual Allowance. If your adjusted income is over £240,000, your allowance is reduced by £1 for every £2 you exceed the threshold. That means if you make £312,000 or more, your allowance could be as little as £4,000.

Learn more

You can find out six more strategies for dealing with surplus business cash in our free, handy guide.

Download your free guide right here.

Alternatively, please email or call 0113 262 1242 to speak directly to us at Cordiner Wealth.

Please note

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation, which are subject to change in the future.

This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.